Accounts payable are those records which consists of the monies that the business owes people and is required to pay them before the trading year ends or one year whichever is shorter. It might be the business’s suppliers, creditors. The business is required to keep records of its accounts payables so as to keep track of what it owes so that incase of any disputes they have their own records to use for making follow ups. They are also kept to help keep track of creditors account and ensure they are paid in due time. Business Training in Kenya has more articles
Control Procedures over Accounts Payable
The control procedures on accounts payable include:
Orders: Requisition notes for purchase should be authorized, all orders should be authorized by a responsible official whose authority limits should be redefined, all major items should be authorized by the board, all orders should be recorded on official documents showing suppliers names, quantities ordered and prices, copies of orders should be retained to determine any deliveries, reorder levels and quantities should be present and preferably recorded in advance on the requisition note.
Receipt of goods: Goods inwards centre should be identified to deal with the receipt of all goods, all goods should be checked for quality and quantity, goods received note should be checked against ledger purchases, orders and procedures should exist to notify the suppliers of under and over indulgence, goods received notes should be raised only when goods are accepted. A responsible official should sign them.
Invoicing Returns: Purchase invoices received should be stamped and given unique serial numbers, purchase invoices should be matched with goods received notes and should not be processed until this is done, each invoice should be checked against the corresponding order and the goods received note and casts and extensions be checked, invoices should be approved for payment by an official independent ordering of ordering and receipt of goods function, the invoice sequential numbers should be checked against purchase daybook details. VAT should be separated from purchases. Maintain batch control total, keep a record of goods returned and check the credit notes received from suppliers.
Compliance Tests over Accounts Payable (Purchases)
auditor should check the purchase orders and check evidence for their sequential numbering, approval and adherence to authority limits of the accounts, goods received note should be checked for proper recording and matching against purchase orders, authorization tests should be done by the auditor, evidence of matching credit notes to goods note receivable.
The other compliance tests over accounts payable include tests should be carried out on purchase ledger control account to review or obtain evidence on reconciliation to the purchases ledger control account.
Substantive Procedures on Creditors
Check accounting records for example additions and cross casts, postings from day books to the purchase’s ledger account and to the purchases ledger control account, voucher the purchases daybook and the purchases returns book to invoices and credit notes, scrutinize the records for large or unusual transactions and vouch these items checking postings to the accounts.
Invoices and credit notes should be checked against daybooks, vouch invoices and purchase orders, agree prices charged on invoices and credit notes to suppliers price lists, check calculations and additions on invoices and credit notes to supplier price lists, check calculations and additions on invoices and credit notes. Perform analytical procedures on purchases, circularize material purchases, carry out cut off tests, and check correct presentation and disclosure of creditors under current liabilities in the balance sheet.
Conclusion on Accounts Payable Procedures
The account payable procedures should and must be undertaken by any organization as per the accounting requirements and negligence should be avoided as it could cause huge losses to the organization. Analysed above is Accounts Payable Procedures